EUR Podium Note Credit Suisse from 25.02.2003
September 22, 2009 | 30,00 EUR | answered by Oliver Burchardt
EUR Podium Note Credit Suisse from 25.02.2003, term 5 years, so-called financial innovation, fixed interest for years 1 and 2,
my tax advisor says that the years 1 and 2 with fixed interest are taxable income,
not the years 3-5, here it is speculative gains that are not taxable after the deadline.
It concerns the years 2007 and 2008, the bank provides different information on this.
Who is knowledgeable in this matter?
Regards
Dear Mrs. Kniep,
Thank you for your inquiry, which I would be happy to answer as part of an initial consultation.
Please note that in my response, I base my answer on the information provided by you, especially regarding the selected investment. If this investment does not have the assumed characteristics, the tax assessment may change.
The Credit Suisse Podium Note, according to the Credit Suisse prospectus, has the following features: In the first two years, a fixed interest payment of 1.5% is made, while in the following years, a reduced interest coupon dependent on the number of securities falling below a certain barrier is paid.
The fixed interest payments in the first two years undoubtedly fall under § 20 (1) No. 7 of the Income Tax Act.
Due to the structure of the bond (the income depends entirely on market development), in my opinion, it constitutes a financial innovation within the meaning of § 20 (2) sentence 1 No. 4 of the Income Tax Act as applicable for the assessment periods of 2007 and 2008. However, taxation under this provision applies only to income from a possible sale of the bond. § 20 (2) sentence 1 No. 4 sentence 3 of the Income Tax Act explicitly does not exclude the ongoing interest payments, which are therefore subject to ongoing taxation under § 20 (1) No. 7 of the Income Tax Act.
This conclusion is supported by the guaranteed repayment of the initial deposit. The repayment of this amount is independent of the price development. Thus, the bond fulfills the characteristics of § 20 (1) No. 7 of the Income Tax Act.
Therefore, the ongoing interest payments for the years 2007 and 2008 constitute income from capital assets and are therefore taxable.
However, as you can see from the various responses, there is certainly room for discretion here. Other assessments may be reasonable, but they carry the risk of non-recognition by the tax authorities and therefore additional costs for tax enforcement advice.
I hope my explanations have been helpful to you.
Best regards,
Oliver Burchardt
Tax Advisor
